The Cracker Mill Has a Beta of 0

The Cracker Mill has a beta of 0.97, a dividend growth rate of 3.2 percent, a stock price of $33 a share, and an expected annual dividend of $1.06 per share next year. The market rate of return is 11.2 percent and the risk-free rate is 3.7 percent. What is the firm's cost of equity?

A) 7.74 percent
B) 8.69 percent
C) 9.30 percent
D) 9.72 percent
E) 10.01 percent